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On 16th April 2012 the Central Bank of Bahrain (CBB) approved
the establishment of the BisB MMF Company B.S.C.(c) with the
Ministry of Industry and Commerce of Bahrain (MOIC) as a Bahraini
Shareholding Company (Closed) and the registration of the below
mentioned retail collective investment undertaking (CIU). The CBB
has authorised the BisB Money Market Fund as a Bahrain domiciled
Shariah complaint retail CIU (as defined in the CBB rulebook Module
CIU) and approved the marketing of the BisB Money Market Fund in
and from the Kingdom of Bahrain.
The CBB and the MOIC take no responsibility for the accuracy and
completeness of the statements and information contained in this
Prospectus or for the performance of the Fund, nor shall they have
any liability to any investor or otherwise for any loss or damage
resulting from reliance on any statements or information contained
in this Prospectus.
The Directors of the Fund Company, whose names appear in the
section headed Board of Directors, state to the best of their
knowledge and belief (having taken all reasonable care to ensure
that such is the case) that all information contained in this
Prospectus is in accordance with the facts and does not omit
anything which is likely to affect the importance and completeness
of such information.
BisB Money Market Fund (a Bahrain domiciled Shariah compliant
Retail CIU created in accordance with the provisions of Volume7
(Collective Investment Undertakings (CIU) of the Central Bank of
Bahrains Rule Book and by an
Instrument issued by BisB MMF Company B.S.C.(c) a closed joint
stock company incorporated under the laws of the Kingdom of
Bahrain)
Offering of Units at an Initial Subscription Price of USD1 per
Unit during the Initial Offering Period and at NAV per Unit
thereafter plus a Subscription Fee of up to 0.25% of the amount
invested
BisB MMF Company B.S.C.(c) Fund Company
Bahrain Islamic Bank B.S.C. Fund Manager, Operator and Placing
Agent
Gulf Custody Company B.S.C.(c) Administrator, Custodian and
Registrar
This Prospectus is dated 12th June 2012
Amended on 14th January 2015
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IMPORTANT INFORMATION
No broker, dealer or other person has been authorised by the
Fund Company, its Directors or the Fund Manager to issue any
advertisement or to give any information or to make any
representations in connection with the offering or sale of Units
other than those contained in this Prospectus and, if issued, given
or made, such advertisement, information or representations must
not be relied upon as having been authorised by the Fund Company,
its Directors, the Fund Manager or the CBB.
This Prospectus does not constitute, and may not be used for the
purposes of, an offer or an invitation to subscribe for, or
otherwise acquire, any Units by any investor in any
jurisdiction:
(a) in which such offer or invitation is not authorised; (b) in
which the person making such offer or invitation is not qualified
to do so; or
(c) in which it is unlawful to make such offer or
invitation.
The jurisdictions in which Units in the Fund may be offered to
potential investors is restricted only as set out in this section
headed Important Information.
By giving any Unitholder not less than 3 Business Days' written
notice prior to any Dealing Day, the Fund may redeem the whole or a
specified percentage of such Unitholder's Units if the Directors
consider that such Unitholder continuing to hold Units would be
detrimental to the pecuniary, taxation, legal or regulatory
interests of the Fund Company, the Fund Manager, the Administrator,
the Registrar or the Custodian or the Unitholders as a whole, or if
such holding is in contravention of any of the prohibitions
contained in this Prospectus, the Articles or the Instrument, or if
any of the representations, warranties or statements given by such
Unitholder in its Subscription Agreement were not true or accurate
or have ceased to be true or accurate. Without limiting the
foregoing, the Fund may redeem the whole or a specified percentage
of a Unitholders Units if the Directors become aware that a
Unitholder is not, or ceases to be, a Unitholder.
Applicants should not treat the contents of this Prospectus as
advice relating to legal, taxation, financial, investment or any
other matters.
Applicants must rely upon their own representatives, including
their own legal advisers and accountants, as to legal, tax,
investment, financial and related matters concerning the Fund and
the merits and risks of an investment in the Units.
Statements made in this Prospectus are based upon the law and
practice currently in force in the Kingdom of Bahrain, and are
subject to change.
By submitting a Subscription Agreement to the Placing Agent, the
recipient hereof agrees to be bound by the foregoing.
The Directors of the Fund Company, whose names appear herein,
accept responsibility, both jointly and severally, for the
information contained in this Prospectus.
The Fund and the investments of the Fund are to be approved as
Shariah compliant by the independent Shariah Advisers. None of the
Fund, Fund Manager or Placing Agent makes any representation or
warranty, express or implied, with respect to the fairness,
correctness, accuracy, reasonableness or completeness of such
determination. It should be noted that differences exist among
Islamic scholars and advisers as to the nature of Shariah
compliance and no assurance is given that other Islamic scholars or
advisers would determine that the Fund and its investments are
Shariah compliant.
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Notice to Investors
If you are in any doubt about the contents of this Prospectus,
you should seek independent professional financial advice. Remember
that all investments carry varying levels of risk and that the
value of your investment may go down as well as up. Investments in
this Fund are not considered deposits and are therefore not covered
by the Kingdom of Bahrains deposit protections scheme. The fact
that this collective investment undertaking has been authorised by
the CBB does not mean that the CBB takes responsibility for the
performance of these investments nor for the correctness of any
statements or representations made by the operator of this
collective investment undertaking.
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Contents
Clause Page
I Definitions
............................................................................................................................
5 II Executive Summary
...........................................................................................................10
III Investment Objective, Policies and Restrictions
................................................................12
IV Overview of Corporate Governance, Supervision and Compliance
..................................14 V Shariah Compatibility
........................................................................................................15
VI Constitution of the Fund Company and the Fund
..............................................................16
VII Board of Directors
..............................................................................................................17
VIII The Fund Manager, Operator and Placing Agent
..............................................................18 IX
The Custodian, Administrator and Registrar
......................................................................18
X Summary of Rights of Unitholders
.....................................................................................19
XI The Application Process
....................................................................................................19
XII The Allotment Process
.......................................................................................................20
XIII Redemptions
......................................................................................................................21
XIV Calculation of Net Asset Value and NAV Per Unit
.............................................................23 XV
Reporting to Unitholders
....................................................................................................24
XVI Tax and Exchange Control Considerations
.......................................................................24
XVII Actual and Potential Conflicts of Interests
.........................................................................25
XVIII Risk Factors
.......................................................................................................................26
XIX Charges, Fees and Expenses related to the Fund
............................................................30 XX
Material Contracts
..............................................................................................................32
XXI General Information
...........................................................................................................33
XXII Form of Instrument
.............................................................................................................34
XXIII Form of Redemption Notice
...............................................................................................36
Schedule 1 Conditions of the Units
........................................................................................................38
Schedule 2 Meetings of Unitholders
.......................................................................................................44
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I Definitions
The following definitions apply throughout this Prospectus:
AAOIFI means the Accounting and Auditing Organisation for
Islamic Financial Institutions
Administrator means Gulf Custody Company B.S.C.(c) a closed
joint stock company incorporated under the laws of the Kingdom of
Bahrain with commercial registration number 50682 having its
registered office at Gajria Building, 2nd Floor, Building 452A,
Road 1010, Block 410, Sanabis, Kingdom of Bahrain or such other
administrator appointed from time to time by the Fund Company when
acting as Administrator in accordance with the Administration,
Custody and Registrar Agreement, or such other entity appointed to
act in such capacity from time to time by the Fund Company
Administration, Custody and Registrar Agreement
means the administration custody and registrar agreement dated
11th June 2012 entered into by the Fund Company, the Administrator,
Custodian and Registrar and the Fund Manager in respect of
administrative duties pertaining to the Fund, in respect of
custodian duties pertaining to the Fund and in respect of registrar
duties pertaining to the Fund, a summary of which is set out in the
section headed Material Contracts
Aggregate Investment means the aggregate amount that an
Applicant seeks to invest in the Fund (net of applicable
Subscription Fees)
Anti-Money Laundering and Know Your Client Regulations
means the Decree Law No. 4/2001 (and subsequent circulars issued
from time to time) and the CBB Regulation No. EDBC/6/2002 -
Preventing and Prohibiting Money Laundering (as amended from time
to time) and all applicable anti-money laundering and combating of
the financing of terrorism (AML/CFT) requirements (in accordance
with CIU 1.9.7 and CIU 1.9.9) as well as the anti-money laundering
laws, rules and orders applicable to any Unitholder as they may
respectively pertain to any or all of the Administrator, Registrar,
Custodian, Fund Manager, Placing Agent, Fund or Fund Company
Applicants means prospective investors wishing to subscribe for
Units
Articles means the memorandum and articles of association of the
Fund Company
Auditor means KPMG Fakhro or such other auditor appointed from
time to time
Bahrain means the Kingdom of Bahrain
Bahrain Islamic Bank Bahrain Islamic Bank B.S.C. a public joint
stock company incorporated under the laws of Bahrain under CR
No.9900
Board of Directors means the members of the Board of Directors
of the Fund Company. Details of the Board of Directors as at the
date of this Prospectus and their Curricula Vitae are set out in
the section headed Board of Directors
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Business Day means any day on which banks in Bahrain are open
for normal banking and foreign exchange business, excluding
Fridays, Saturdays and public holidays in Bahrain
CBB means the Central Bank of Bahrain
Custodian means Gulf Custody Company B.S.C.(c) a closed joint
stock company incorporated under the laws of the Kingdom of Bahrain
with commercial registration number 50682 having its registered
office at Gajria Building, 2nd Floor, Building 452A, Road 1010,
Block 410, Sanabis, Kingdom of Bahrain or such other custodian
appointed from time to time by the Fund Company when acting as
Custodian in accordance with the Administration, Custody and
Registrar Agreement, or such other entity appointed to act in such
capacity from time to time by the Fund Company
Customer Information means an Applicants required personal
information as set out in the Subscription Agreement and any
further information requested by the Placing Agent, Fund Manager
and/or Administrator in order to ensure compliance with Anti-Money
Laundering and Know Your Client Regulations
Dealing Cut-Off means Bahrain Islamic Bank branch closing time
on each Monday save where such Monday is not a Business Day, in
which case the Dealing Cut-Off shall occur on the most proximate
previous Business Day
Dealing Day means each Wednesday save where such Wednesday is
not a Business Day, in which case the Dealing Day shall be the next
following Business Day
Debt Securities include, but are not limited to, all types of
sukuk approved by the Shariah Advisers
Equities means shares or stock in the share capital issued by
companies that are listed on exchanges or traded on markets
Establishment Expenses means the expenses incurred by the Fund
during its establishment detailed in the section headed Charges,
Fees and Expenses Relating to the Fund
Financial Year means the period commencing on the Initial
Closing Date and ending on 31 December and thereafter, each period
commencing on 1 January and ending on 31 December
Fund means the BisB Money Market Fund, a Shariah fund
established by the Fund Company under the laws of Bahrain
Fund Assets means the assets of the Fund, held by the Fund
Company on behalf of Unitholders in the Fund (excluding its BHD
1,000 issued and paid up share capital) including all monies
standing to the credit of the Units Fund Account and all proceeds
of the foregoing
Fund Company means BisB MMF Company B.S.C.(c) a closed joint
stock company incorporated in Bahrain with commercial registration
number 81322
Fund Management Agreement
means the Fund Management Agreement dated 10th June 2012 entered
into by the Fund Company and the Fund Manager in respect of fund
management duties pertaining to the Fund, a summary of which is set
out in the section headed Material Contracts
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Fund Manager means Bahrain Islamic Bank B.S.C., or such other
fund manager appointed by the Fund Company to manage the Fund
Assets from time to time
Fund Performance Review Report
a weekly report prepared by the Fund manager setting out the NAV
of the Fund, the performance of the Fund, a summary of the
investments of the Fund, the total number of Units and assets under
management
GCC means the Gulf Cooperation Council countries from time to
time, which are as of the date of this Prospectus, Saudi Arabia,
United Arab Emirates, Qatar, Kuwait, Bahrain and Oman
Initial Closing Date the next Business Day following the day
that the Custodian confirms to the Operator that the Custodian is
able to receive funds from the Operator to invest in the Fund, and
the Operator confirms that they are able to deposit funds in the
Fund
Initial Offering Period means the period commencing on the date
of this Prospectus and ending on the Initial Closing Date
Initial Subscription Price means USD 1 per Unit
Instrument means a legal instrument issued by the Fund Company
under the laws of Bahrain. The form of the Instrument is contained
in the section headed Form of Instrument
Investment Objective means the investment objective of the Fund
as set out in the section headed Investment Objective, Policies and
Restrictions
Investment Policy means the investment policy of the Fund as set
out in the section headed Investment Objective, Policies and
Restrictions
Investment Guidelines and Restrictions
means the investment guidelines and restrictions which apply to
the Fund as set out in the section headed Investment Objective,
Policies and Restrictions
Laws means all applicable laws and regulations and, if
applicable, the prevailing rules, regulations, requirements,
determinations, practice and guidelines of Bahrain, the CBB and any
other organisation to which the Fund, the Fund Company and the Fund
Manager are subject
Management Fee means the management fee payable to the Fund
Manager as set out in the section headed Charges, Fees and Expenses
related to the Fund
Material Contracts means the material agreements entered into by
the Fund Company, as at the date of this Prospectus, all of which
are summarised in the section headed Material Contracts
MENA Region means the countries of the GCC and the wider Middle
East and Northern Africa
Minimum Holding Period means the 30 calendar days from the date
of issue of any Unit to an investor
MOIC means the Bahrain Ministry of Industry and Commerce
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NAV or Net Asset Value means the net asset value of the Fund,
i.e. the net value of the Fund Assets as determined from time to
time by the Administrator in accordance with the valuation
methodology set out in the section headed Calculation of Net Asset
Value
NAV Per Unit is calculated to one hundredth of one US cent by
dividing the NAV by the number of Units in issue
NAV Calculation Formula means total Fund Assets less total debts
and liabilities of the Fund divided by total number of Units
outstanding prior to such Dealing Day
OECD means the Organisation for Economic Cooperation and
Development
Offer means the offer of Units to investors pursuant to the
terms of this Prospectus
Operator means Bahrain Islamic Bank B.S.C.
Placing Agent means Bahrain Islamic Bank B.S.C., a public joint
stock company incorporated under the laws of Bahrain and any other
placing agent which is appointed by the Fund Company from time to
time
Placing Agreement means the agreement between the Fund Company
and the Placing Agent, pursuant to which the Placing Agent agrees
to act as a placing agent for the Fund, a summary of which is set
out in the section headed "Material Contracts"
Prospectus means this Prospectus, as amended from time to
time
Redemption means the redemption of Units the details of which
are set out in Part XIII of the Prospectus
Redemption Notice means a redemption notice substantially in the
form set out in the section headed Form of Redemption Notice
Redemption Proceeds means the monies due to Unitholders,
following a Redemption of Units
Registrar means Gulf Custody Company B.S.C.(c) a closed joint
stock company incorporated under the laws of the Kingdom of Bahrain
with commercial registration number 50682 having its registered
office at Gajria Building, 2nd Floor, Building 452A, Road 1010,
Block 410, Sanabis, Kingdom of Bahrain or such other registrar
appointed from time to time by the Fund Company when acting as
registrar for the Fund or such entity appointed in such capacity
from time to time by the Fund Company
Rulebook means the CIU Module under the CBB Rulebook Volume 7
(Collective Investment Undertakings (CIU)), as amended by the CBB
from time to time
Shariah Advisers means the shariah advisers set out in Part V of
this Prospectus and who are appointed by the Fund Company to ensure
that the Fund is and remains Shariah compliant.
Shariah compliant Retail CIU
means a CIU which complies with the provisions of the
Rulebook
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Strategic Commitment means the Operators commitment to the Fund
at the Initial Offering Period, as described in the Executive
Summary
Subscription Agreement means the subscription agreement required
to be delivered by an Applicant to the Placing Agent in connection
with an application to subscribe for Units
Subscription Fee means the subscription fee of up to 0.25% of
the Aggregate Investment
Subscription Price means USD1 per Unit during the Initial
Offering Period and NAV Per Unit as calculated on the relevant
Dealing Day for any offering subsequent thereafter
Transaction Documents means this Prospectus, the Subscription
Agreement, the Articles and the documents summarised in the section
headed Material Contracts
Unitholder(s) means a registered holder of Units in issue from
time to time Units means the units in the Fund which are in issue
from time to time,
which represent the rights of the investors in the Fund
Units Fund Account means the account in to which an Applicants
Aggregate Investment and Subscription Fees are to be paid, details
of which are set out in the section headed The Application
Process
In this Prospectus references to USD are to the lawful currency
of the United States of America and references to BHD are to the
lawful currency of the Kingdom of Bahrain.
The information in this Prospectus does not relate to events
occurring subsequent to the date hereof.
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II Executive Summary
The following summary of the terms and conditions of the Fund is
qualified in its entirety by the detailed information included
elsewhere in this Prospectus and should be read in conjunction with
the full text of this Prospectus.
The Fund BisB Money Market Fund is an open-ended fund created by
the Fund Company and established as a Shariah compliant Retail CIU
pursuant to the CBBs regulatory Rulebook.
The Fund Company
BisB MMF Company B.S.C.(c) is a closed joint stock company
incorporated in Bahrain with commercial registration number
81322.
The Fund Manager Bahrain Islamic Bank B.S.C.
Instrument a legal instrument issued by the Fund Company under
the Laws of Bahrain a form of which appears under the heading Form
of Instrument.
Investment Objective The Fund aims to generate capital growth
and return capital to its Unitholders through maintaining a high
level of liquidity by investing in low risk quality Shariah
compliant money market instruments.
Investment Policy means the investment strategy of the Fund to
achieve its objective which is to invest in high-quality Shariah
compliant money market instruments issued by banks, corporations
and governments.
Operators Strategic Commitment
The Operator shall, during the Initial Offering Period,
subscribe for a minimum of 5,000,000 Units, at the Initial
Subscription Price of USD1 per Unit, making a total commitment of
USD5,000,000.
The Operator shall not reduce its commitment to less than
5,000,000 Units prior to the expiry of the period ending 12 months
from the Initial Closing Date if the Operator wishes to reduce its
commitment at any time after the Initial Closing Date it shall
notify the Unitholders.
The Operator shall also notify and seek the prior approval of
the CBB in the event that its investment in the Fund is expected to
fall below 5,000,000 Units.
The Operator shall not increase its commitment and/or subscribe
for Units in excess of USD10,000,000.
Subscriptions during the Initial Offering Period
During the Initial Offering Period, Units shall be offered at
the Initial Subscription Price of USD1 per Unit plus a Subscription
Fee of up to USD0.0025 per Unit, which may be waived by the Placing
Agent in its absolute discretion.
Subscriptions following the Initial Offering Period
Following the Initial Offering Period, Units will be offered at
NAV Per Unit on the relevant Dealing Day.
Minimum Applications
Investors are required to apply to invest an amount not less
than 25,000 units as their initial investment and not less than
1,000 units for each subsequent investment.
Minimum Holding Period Each Unit must be held for a minimum
period of 30 calendar days.
Minimum Holding Amount Any redemption request that will reduce
an investors holding in the Fund to below1,000 units will be deemed
to be a request to redeem the investors entire holding in the Fund.
Any such request will only be considered and processed after the
Minimum Holding Period has expired.
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Valuation of Units The initial subscription value is USD1 per
unit. Thereafter NAV Per Unit will be calculated by the
Administrator on each Dealing Day in accordance with Paragraph XIV
of this Prospectus.
Currency The Fund will be denominated in, and the reference
currency will be, USDs.
Financial Reporting A Fund Performance Review Report will be
issued weekly
During the life of the Fund, the Fund shall submit a semi-annual
report which has been reviewed by the Auditor covering the first
six months of the Financial Year to the CBB and to the Unitholders
within 2 months of such period or such other time as agreed between
the Fund and the CBB.
During the life of the Fund, the Fund shall submit an audited
annual report to the CBB and to the Unitholders within 4 months of
the end of each Financial Year.
The semi-annual report and the audited annual report shall be
prepared in accordance with AAOIFI.
Risk Factors Investment in the Fund carries significant risk,
and investment in the Fund should be regarded as medium to long
term in nature and is only suitable for investors who understand
the risks involved. Unitholders might not recover monies invested.
Applicants should refer to the section headed Risk Factors for a
summary of certain of the risks involved.
Term The Fund is an open-ended fund with no fixed term. The term
of the Fund shall commence on the next Business Day following the
Initial Closing Date.
The Fund is established for an indefinite period by the Fund
Company. The Fund Company reserves the right to terminate the Fund
at any time without penalty to any party involved in the following
events and after obtaining CBB approval upon the occurrence of any
of the following:
(i) NAV per unit of the Fund Assets falls below USD 0.5 per
unit; or
(ii) cancellation of the registration by the CBB; or
(iii) other unavoidable circumstances.
Under Bahrain regulations, termination of the Fund requires
prior approval by the CBB and that reasonable notice be given to
Unitholders. The Directors will endeavour to give Unitholders 3
months prior notice of termination. Neither the death, bankruptcy
nor incapacity of a Unitholder in the Fund nor the bankruptcy or
resignation of the Fund Manager shall terminate the Fund or in any
way affect its continuity.
The Fund can be terminated at the request of the CBB.
Shariah Compliance
The Fund accords with the principles of Shariah. The Fund's
structural framework shall be established under the guidance of the
three Shariah Advisers who will also be appointed to oversee the
compliance with Shariah of the Funds structure, operations,
investments and financing activities. Subject to the Funds
compliance, the Shariah Advisers will issue an annual Shariah
compliance certificate for the Fund. In all cases, the Shariah
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Advisers will obtain final confirmation of the Shariah
compliance of any relevant aspects of the Fund (for instance
structural framework, individual investments, issues relating to
ongoing monitoring, and any other relevant considerations).
Governing Law The Transaction Documents shall be governed by and
construed in accordance with the laws of the Kingdom of Bahrain
save to the extent these conflict with the rules and principles of
Shariah, when the latter shall prevail and any dispute in relation
to these documents shall be finally determined by arbitration
administered by the Bahrain Chamber for Dispute Resolution
(BCDR-AAA) in accordance with its Arbitration Rules.
III Investment Objective, Policies and Restrictions Investment
Objective
The Fund aims to increase its Net Asset Value with the objective
of generating returns in excess of the USD fixed deposit rates by
investing in low risk quality Shariah compliant money market
instruments and maintaining a high level of liquidity in GCC and
OECD countries.
Investment Policy
The investment strategy of the Fund to achieve its objective is
to invest in high-quality Shariah compliant money market
instruments issued by banks, corporations and governments. Such
investments may include: short term deposits in the inter-bank
market; Shariah compliant fixed term deposits with banks; and all
types of sukuk issued by the sovereign wealth funds and corporates
and approved by the Shariah Advisers.
Financing Policy
The Fund will only secure external financing if the following
conditions are met:
(a) the purpose of the financing is short term to provide short
term liquidity to the fund and will not be consistently
renewed;
(b) the financing is repayable and repaid out of the assets of
the Fund; (c) the financing will not be used to acquire assets that
are encumbered in any way
including, but not limited to, mortgaged assets; and (d) the
financing will not exceed 20% of the NAV of the Funds assets.
Liquidity and Minimising Risk
The investment strategy will aim to maintain liquidity in a
diverse and low risk portfolio.
Risk will be minimised by ensuring the following restrictions
apply to investments by the Fund:
(a) any exposure to cash and cash equivalents of any single
party will not exceed 20% of the NAV of the Fund Assets;
(b) exposure to transferable securities of a single party will
not exceed 10% of the NAV of the Fund Assets;
(c) exposure to transferable securities of a single group of
connected parties will not exceed 20% of the NAV of the Fund
Assets;
(d) exposure to sukuk not traded on a recognised exchange will
not exceed 10% of the NAV of the Fund Assets;
(e) exposure to government and public sector securities issued
by a single country in the GCC or OECD will not exceed 20% of the
NAV of the Fund Assets;
(f) the weighted average maturity of all the assets held by the
Fund will not exceed 1 year;
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13
(g) exposure to money market instruments denominated in
currencies not pegged to the USD will not exceed 20% of the NAV of
the Fund Assets;
(h) the minimum investments in money market instruments will be
60% of the NAV of the Fund Assets;
(i) exposure to any one country outside of Bahrain, to
investments other than money market instruments, will not exceed
20% of the NAV of the Fund Assets;
(j) the maximum investment in cash and cash equivalents of the
Operator will be 10% of the NAV of the Fund Assets; and
(k) the Operator will not be counterparty to any transaction,
other than for cash and cash equivalents,
Restricted Investments
The Fund will not invest or expose itself to the following:
(a) non Shariah compliant investments;
(b) securities issued by Bahrain Islamic Bank B.S.C.;
(c) any asset which involves the assumption of unlimited
liability; (d) securities issued by entities in which any director
or officer of the Fund Company and/or
Bahrain Islamic Bank B.S.C. individually owns more than half of
one percent or collectively owns more than 5% of all the securities
issued by that entity;
(e) any listed or un-listed Equities;
(f) any sukuk issued by corporations rated below investment
grade; (g) any type of funds;
(h) real estate investment trusts;
(i) commodities;
(j) financial derivatives;
(k) short-selling;
(l) retail finance clients; (m) provide any lending including
murabaha;
(n) stock lending arrangements;
(o) underwriting; and
(p) financial guarantees. Investment Guidelines and
Restrictions
In implementing the Investment Policy, the Fund Manager will
endeavour to ensure that the Fund Assets comply with the following
Investment Guidelines and Restrictions.
Eligible Securities
Shariah compliant:
(i) short term deposits in the inter-bank market;
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14
(ii) fixed term deposits with banks;
(iii) Sovereign, quasi sovereign and/or government owned
corporations Sukuk approved by the Shariah Advisers;
(iv) Sukuk issued by corporates and approved by the Shariah
Advisers; and
(v) any other Shariah compliant money market instruments.
Breaches of Investment Guidelines and Restrictions
The Units will not be listed on any exchange nor be traded on
the secondary market.
The Investment Policy will be maintained at all times. Any
breach within the control of the Fund Manager resulting in a price
change will be rectified immediately.
Changes to Investment Policy
Any amendment to the Investment Policy, any Material Contract
and any other change deemed material by the Fund Manager, will be
subject to the prior approval of the CBB.
Unitholders will receive notice of any such amendment unless the
directors of the Fund Company decide they wish to seek Unitholder
approval pursuant to clause 11 of Schedule 1 to the Instrument.
IV Overview of Corporate Governance, Supervision and
Compliance
Entity Description of Role
Board of Directors Overall responsibility for the management of
the Fund rests with the Directors of the Fund Company. The
Directors of the Fund Company are responsible for this Prospectus
including the preparation of the Investment Objective, Investment
Policy and the Investment Guidelines and Restrictions.
Fund Manager Under the Fund Management Agreement, the Directors
have delegated certain powers to the Fund Manager, which is
responsible for the day-to-day management of the Fund Assets
(subject to the Investment Objective, the Investment Policy and the
Investment Guidelines and Restrictions).
Custodian, Registrar and Administrator
Gulf Custody Company B.S.C.(c) shall act as the global custodian
of the Fund Assets and provide administrative and registrar
services to the Fund and, in particular, shall be responsible for
calculating the NAV Per Unit on each Dealing Day.
Placing Agent The Placing Agent shall be responsible for
ensuring investors compliance with Anti-Money Laundering and Know
Your Client Regulations.
Anti-Money Laundering and Know Your Client Regulations
Compliance
The Placing Agent is responsible for the Funds compliance with
Anti-Money Laundering and Know Your Client Regulations.
The Fund Manager shall be granted the discretion to accept or
reject applications in whole or in part, provided that the Placing
Agent has confirmed each applications compliance with Anti-Money
Laundering and Know Your Client Regulations. Prior to being able to
accept an application, the Placing Agent must first have:
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15
to its satisfaction, received all Customer Information together
with a duly completed Subscription Agreement;
received notification from the Administrator of the deposit of
the amount an Applicant is applying to invest, together with the
applicable Subscription Fees; and
received a duly completed Subscription Agreement.
The Fund Company, Fund Manager, Administrator and Placing Agent
all reserve the right to require further Customer Information in
order to assist with the verification of the identity of any
Applicant or that of the person or entity on whose behalf such
Applicant is applying to purchase Units, and/or such Applicants
source of funds.
The Placing Agent shall be responsible for ensuring investors
compliance with Anti-Money Laundering and Know Your Client
Regulations.
The Fund reserves the right to disclose information relating to
Applicants, any person or entity on whose behalf an Applicant is
applying to purchase Units, and any legal and beneficial owners of
Units to the Funds advisers and service providers and as required
by any legal or regulatory body.
V Shariah Compatibility
The Fund Company shall appoint three Shariah Advisers who shall
be independent of the Fund and the Operator to undertake the role
of Shariah Advisers to the Fund.
The Fund shall comply with all applicable standards issued by
AAOIFI.
The Fund shall ensure that its operations and investments are
subject to the compliance reporting and monitoring of its Shariah
Advisers, in accordance with applicable AAOIFI standards.
The audited annual report of the Fund shall contain a report and
opinion from the Funds Shariah Advisers explaining the work
undertaken by the Shariah Advisers to verify compliance by the Fund
with Shariah and give an opinion on the extent of the Funds
compliance with the Shariah.
Shariah Advisers
Shaikh Dr. Nidham Mohammed Saleh Yaquby
Shaikh Yaquby is one of the most renowned and experienced
Shariah scholars in the global Islamic financial industry. He is on
the board of numerous financial institutions in Bahrain and
internationally including such names as Dow Jones Islamic Index,
AAOFI, HSBC and ABC Islamic Bank. Shaikh Yaquby has sat on the
Shariah board of Bahrain Islamic Bank since 1999. He has numerous
publications to his name and is a highly sought after scholar for
lectures and presentations at various seminars and conferences.
Shaikh Yaquby has been presented with many awards for his services
to the Islamic financial industry. He holds his Ph.D. from Lahaye
University and also holds a degree in Economy and Comparison of
Religions from the University of McGill, Montreal, Canada. Shaikh
Yaquby is also a holder of several Shariah academic degrees
achieved under the guidance of a number of Shariah scholars and
Islamic ulema within and outside Bahrain. He is also an adjunct
professor at International Islamic University in Malaysia.
Shaikh Dr. Abdul Latif Mahmood Al-Mahmood
Shaikh Al-Mahmood is one of the most experienced Shariah
scholars in the global Islamic financial industry. He is a Member
of the Shariah Supervisory Board of Takaful International, ABC
Islamic Bank and Joint Shariaa Supervisory Board of AlBaraka Group.
Shaikh Al-Mahmood has been on the Shariah board of Bahrain Islamic
Bank as a chairman since 1979. He has been a Preacher at a number
of Bahrains mosques since 1973 and a lecturer in Quran
interpretation, jurisprudence and preaching. He is a regular
participant in jurisprudence, educational, economic, intellectual,
social and cultural conferences and seminars. He holds a Ph.D. with
distinctive degree of honour from the University of Ez Zitouna and
a Masters degree in comparative jurisprudence from the Faculty of
Shariah & Law of the University of Al Azhar.
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Sheikh Dr. Osama Mohammed Saad Bahar
Sheikh Bahar is a prominent, highly-respected Shariaa scholar
from Kingdom of Bahrain. He is currently Head of the Shariaa
Compliance and Advisory at First Energy Bank, following earlier
senior positions at Islamic banks in Bahrain including Head of
Shariaa Compliance at Al Salam Bank and before that, Shariaa
Compliance Officer at ABC Islamic Bank. Sheikh Bahar is also a
Member of the Shariaa Supervisory Board of the Global Banking
Corporation, International Investment Bank, Allianz Global
Investors, Allianz Takaful (Bahrain), International Tharawat and
Family Bank; and Shariaa Advisor for Sakana Holistic Housing
Solutions and Reef (Real Estate Finance). Sheikh Bahar was awarded
his Doctorate degree from Lahaye University in Holland, his Master
Degree from Al Emam Al Awzae University in Lebanon and his Bachelor
degree in Islamic Shariaa from Prince Abdul Qader University of
Islamic Studies in Algeria.
Prohibited Investments
An assessment of the acceptability of each Investment proposed
for acquisition will be made on a case-by-case basis at the
discretion of the Shariah Advisers. Investments in and receiving
income from any haram activity by the Fund is prohibited.
VI Constitution of the Fund Company and the Fund
The Fund
BisB Money Market Fund is an open-ended fund created by the Fund
Company and authorised as a Bahraini domiciled retail CIU by the
CBB pursuant to the CBBs regulatory Rulebook.
The Fund Company by legal Instrument will create Units in the
Fund which investors will be invited to subscribe for pursuant to
the Subscription Agreement. The Instrument is, governed by and
construed in accordance with the laws of the Kingdom of
Bahrain.
Monies raised from subscriptions for Units will be segregated
for accounting purposes from the Fund Companys other assets, by
being placed in the Fund Companys Units Fund Account and will be
invested in accordance with the Investment Policy of the Fund.
The Fund Company
BisB MMF Company B.S.C.(c) is a fund company in Bahrain with
commercial registration number 81322.
The share capital of the Fund Company is BHD1000 divided into
100 shares of BHD10 each. BisB and Nader Mohammed Albastaki will
each respectively hold 99% and 1% of the shares in the Fund Company
(the latter holding as nominee for BisB).
Role of the Fund Company
The Fund Company is the legal entity which will enter into
transactions on behalf of the Fund. The Fund Company will have
primary responsibility for the Fund, including:
appointing a fund manager to make investment and divestment
decisions; and
approving and executing Transaction Documents on behalf of the
Fund.
The Board of Directors will also be responsible for:
ensuring that investments are made in accordance with the
Investment Policy and in compliance with the Investment Guidelines
and Restrictions;
making distributions to Unitholders; and
the overall performance of the Fund.
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The Fund Company will outsource some of its responsibilities to
the Fund Manager pursuant to the terms of the Fund Management
Agreement.
VII Board of Directors
The Board of Directors is the most senior decision-making body
of the Fund. It has overall authority over, and responsibility for,
the operations and management of the Fund. It will therefore
exercise supervision and control of the Fund and the Fund Company
including deciding matters of general policy and reviewing the
actions of the Fund Manager, the Custodian, the Registrar, the
Administrator and other professional advisers to the Fund. The
Board of Directors will be responsible for monitoring the
performance of the Fund and for considering and, if thought fit,
recommending changes to the Investment Policy or the Investment
Guidelines and Restrictions.
The shareholders of the Fund Company may appoint additional
Directors and officers from time to time, subject to CBB
approval.
The Directors of the Fund Company as at the date of this
Prospectus are:
Abdulrahman Mohamed Abdulmajeed Turki General Manager, Retail
Banking, Bahrain Islamic Bank B.S.C.
Mr. Turki is the General Manager of Retail Banking at Bahrain
Islamic Bank. He is a senior banking professional with over 31
years of experience in various fields of banking industry in
Bahrain, Oman and Qatar. His banking experience started in the
areas of Treasury and Investment where he spent seventeen years
with Grindlays Bahrain Bank (later acquired by Al Ahli United Bank)
adding a wealth of knowledge and skills in the field of financial
and foreign exchange markets. Mr. Turki then shifted to the
consumer/retail banking within Grindlays Bahrain Bank and
subsequently with the Commercial Bank of Qatar before joining
Bahrain Islamic Bank as General Manager, Retail Banking in 2008.
His expertise extends in many core banking fields such as Treasury
& Investment, Marketing & Sales, Product Development,
Retail banking, Corporate & Commercial banking, non-resident
market and in the Islamic banking sector. Mr. Turki has an MBA from
the University of Strathclyde, Glasgow, Scotland and an Advanced
Diploma in Banking Studies from Bahrain Institute of Banking and
Finance. He also has attended, presented and formed part of the
discussion panels at, a large number of courses, seminars, forums
and workshops relating to banking and finance.
Abdulrazaq Abdulkhaleq Abdulla Hasan Assistant General Manager,
Central Operations
Mr. Abdulrazaq is a highly experienced banking professional with
almost 34 years of banking experience in various capacities. He has
worked for Standard Chartered Bank in Bahrain for over five years
and has been working with Bahrain Islamic Bank for the last 29
years and demonstrates experience in commercial banking, branch
management, marketing, and internal audit. He is currently an
Assistant General Manager for Central Operations and oversees many
departments including International Trade Finance. He specializes
in accounting and investment banking and possesses extensive
knowledge of Islamic Trade Finance techniques. Mr. Abdulrazaq has
various internationally recognised accounting qualifications to his
credit and has completed the Gulf Executive program, University of
Virginia, Darden Business School, U.S.A. Apart from being a member
of various committees constituted by Bahrain Islamic Bank, he is
also a board member of Benefit Company. He represents Bahrain
Islamic Bank on the ICC National Committee in the Kingdom of
Bahrain and is the Co-Vice Chair of the ICC Bahrain Trade Finance
Forum.
Nader Mohammed Albastaki Head of Investments and Financial
Institutions, Bahrain Islamic Bank B.S.C.
Mr. Nader is a highly experienced banking professional with
almost 13 years of banking experience in various capacities. His
banking experience started in 2000 when he joined the Islamic
Division of Arab Banking Corporation as a credit analyst. In early
2003, he joined Gulf International Bank and managed a portfolio of
trade finance facilities, term loans, contract financing,
syndicated loans, project finance and real estate finance. In
August 2008 he left Gulf International Bank as a Vice President and
joined Bahrain Islamic Bank as a Senior Manager of the Treasury and
Investment Division. He currently serves Bahrain Islamic Bank as a
Head of Investments and Financial Institutions. Mr Nader holds
Bachelor's degree in Accounting from the University of Bahrain.
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The Directors will not receive any compensation by the Fund, but
will be reimbursed for out-of-pocket expenses reasonably incurred
by them in undertaking their duties as Directors by the Fund. In no
circumstance shall the aggregate out of pocket expenses of the
Directors together exceed USD 3,000 per annum.
VIII The Fund Manager, Operator and Placing Agent
Bahrain Islamic Bank was incorporated in the Kingdom of Bahrain
in the year 1979 by Amiri Decree No.2 of 1979. Bahrain Islamic Bank
holds a CBB license to operate as a Retail Islamic bank and it
carries out permitted investment activities pursuant to that
licence.
Fund Management Team
Hussain Ebrahim Al-Banna Senior Dealer, Treasury &
Investments, Bahrain Islamic Bank B.S.C.
Mr Al-Banna has more than 8 years of experience as a dealer in
treasury and investments. Mr. Al-Banna started his banking career
with BNP Paribas Bank, Bahrain followed by 3 years with the Bank of
Bahrain and Kuwait. During this period, he managed a USD700 million
fixed income portfolio. He joined Bahrain Islamic Bank in 2008 and
is currently a Senior Dealer on the treasury desk of Bahrain
Islamic Bank. His primary responsibilities include trading in
foreign exchange, money markets and fixed income securities. Mr.
Al-Banna holds a Bachelors in Banking and Finance from the
University of Bahrain and a Treasury & Capital Markets Diploma
from the BIBF.
IX The Custodian, Administrator and Registrar
Gulf Custody Company B.S.C.(c), has been appointed as:
(a) the Custodian of the Fund Assets which will be held directly
by the Custodian or through its agents, sub-custodians, or
delegates pursuant to the terms of the Administration, Custody and
Registrar Agreement;
(b) as the Administrator of the Fund pursuant to the terms of
the Administration, Custody and Registrar Agreement. The
Administrator is responsible for the general administration of the
Fund, which includes, amongst other things, arranging the
calculation of asset valuations and fees, and administration of
invested cash; and
(c) as the Registrar of the Fund pursuant to the terms of the
Administration, Custody and Registrar Agreement. The Registrar is
responsible for providing registrar services in relation to the
Units, which includes, amongst other things, keeping the register
of Unitholders up to date and dealing with requests for and
arranging for the issue, transfer, allotment, redemption,
conversion or purchase of Units.
Gulf Custody Company B.S.C.(c) is a directly owned subsidiary of
Gulf Company K.S.C. which is an independent financial institution
catering to conventional and Islamic mutual funds of various
categories from its offices in Kuwait, Bahrain and Oman. It
provides a comprehensive and wide range of high quality and cost
effective services to both clients and fund managers covering the
MENA Region markets with a dedication to accuracy, completeness and
timeliness.
Gulf Custody Company B.S.C.(c) is an established provider of
custody, administration and registry services to funds and
investment portfolios. They are an independent financial
institution catering to conventional and Islamic mutual funds of
various categories from their office in Bahrain and the parent
company in Kuwait (Gulf Custody Company K.S.C.). Their clients
range from small start-up funds to large asset managers. Gulf
Custody Company B.S.C.(c) deals with a wide variety of fund
categories and structures and is committed to providing quality
service to its clients.
The Custodian and Administrator may appoint a third party to
perform any or all of their respective obligations under the
Administration, Custody and Registrar Agreement. Such appointment
is subject to certain conditions which include the Custodian and/or
the Administrator, as may be relevant, having taken all reasonable
care, including ensuring that each third party holds the necessary
licences and approvals to, and has the requisite expertise to,
carry out such duties. Notwithstanding any permitted delegation,
the Custodian and/or the Administrator as the case may be, shall
remain liable to the Fund Company for all acts and
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omissions of any such third party it appoints and for the
fulfilment and discharge of its obligations and liabilities under
the Administration, Custody and Registrar Agreement.
X Summary of Rights of Unitholders
Unitholders have the rights and obligations set out in the
Instrument, this Prospectus and other Transaction Documents. The
legal rights of Unitholders are summarised below.
Title to Units
A register of Unitholders is maintained by the Registrar and
ownership of Units shall be evidenced by entries on the register of
Unitholders. Certificates will not be issued.
Pro-rata beneficial interest in the Fund Assets
Units shall at all times provide Unitholders with a beneficial
interest in the Fund Assets, pro rata to the number of outstanding
Units held by the Unitholder. The Units will rank pari passu in all
respects with each other.
Limited Liability
Units shall only be issued fully paid and the liability of
Unitholders is limited to the amount invested at the time their
Units were issued.
Accumulation of Dividend Income
Any income received by the Fund Company, on behalf of the Fund,
will be accumulated into the Fund Assets, increasing the NAV Per
Unit, save for where the Fund Manager elects to declare a dividend.
The Fund Company shall seek the prior approval of the CBB to
declare and to distribute any dividend.
Weekly Redemptions
Unitholders are entitled to apply to redeem some or all of their
Units on each Dealing Day, save that each Unit must be held for a
minimum period of 30 calendar days.
Voting rights
Unitholders shall not be entitled to vote at meetings of the
Fund Company. Unitholders shall be entitled to vote at meetings of
the Unitholders convened in accordance with Schedule 2 of the
Instrument.
XI The Application Process
Applications will be processed on the Initial Closing Date and
thereafter weekly on each Dealing Day.
In order to apply to invest in the Fund, an Applicant must
complete the following steps:
Delivery of Documents
Deliver by hand, courier or facsimile (with original hand
delivered or couriered) the following documents to the Placing
Agent at any of its branches:
(a) a duly completed and executed Subscription Agreement;
(b) the Customer Information set out in the Subscription
Agreement; and
(c) all additional information and documentation requested by
the Placing Agent, Fund Manager and Administrator to ensure
compliance with Anti-Money Laundering and Know Your Client
Regulations.
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Payment of Aggregate Investment and Subscription Fees
Pay into the Units Fund Account (details below) without
deduction, an amount calculated as follows:
The aggregate amount that the Applicant wishes to invest in
Units in the Fund (the Aggregate Investment)
Plus
A Subscription Fee of up to 0.25% of the amount intended to be
invested in the Fund (the Subscription Fee)
Units Funds Account
Investors should note that in order for cleared funds to be
received in Bahrain by the specified payment deadline payment will
need to be made into their Bahrain Islamic Bank B.S.C. bank account
for value at least one Business Day prior to the deadline
All subscription monies must originate from an account in the
name of the applicant. Payments from a third party will not be
accepted.
XII The Allotment Process
Acceptance of Applications
The Fund Manager shall have the discretion to accept or reject
applications in whole or in part, provided that the Placing Agent
has ensured each applications compliance with Anti-Money Laundering
and Know Your Client Regulations. Prior to being able to accept an
application, the Fund Manager must first have:
to its satisfaction, received all Customer Information together
with a duly completed Subscription Agreement; and
received notification from the Administrator of the deposit of
the amount an Applicant is applying to invest, together with the
applicable Subscription Fees into the Units Fund Account.
Subject to the receipt of the items above, the Fund Manager will
have full discretion to accept or reject applications for Units.
Where the Fund Manager accepts an application after a Dealing
Cut-Off (but before the relevant Dealing Day), the application will
be processed on the first Dealing Day following the next Dealing
Cut-Off, save that the Fund Manager has the discretion to process
the application on the earlier occurring Dealing Day where it has
given prior notice to the Administrator.
The Registrar shall send acceptance letters to Applicants
advising them of whether their application has been accepted in
whole or in part or rejected outright.
Units are issued on a forward-pricing basis. This means that, to
the extent that an application is accepted in whole or in part by
the Fund Manager before a Dealing Cut-Off, the Fund Manager shall
procure that Units are issued to the Applicant by reference to the
Subscription Price on the next Dealing Day following that Dealing
Cut-Off and will procure the payment of Subscription Fees relating
to issued Units to the Placing Agent(s) to whom such fees are due.
Any such Subscription Fees will be paid to the relevant Placing
Agent(s) for their absolute use and benefit and shall not form part
of the Fund Assets.
Fractional Units shall not be issued.
The rights attached to Units are summarised in the section
headed Summary of Rights of Unitholders and are set out in full in
the Instrument.
Rejected Applications
To the extent that an application to invest in the Fund is
rejected, the Fund Manager shall ensure that such funds and related
Subscription Fees are returned to the Applicant by inter-bank
transfer to the account from which such monies originated, at the
risk and expense of the Applicant, less bank charges and without
accounting for profit earned thereon.
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Fractional Units shall not be issued. All rounding benefits will
be retained by the Fund.
Ownership Restrictions
Investors may subscribe for Units provided that legislation or
regulations in Bahrain and/or in their country of citizenship,
residence, domicile, or incorporation permit them to do so.
Minimum Applications
Applicants are required to apply to invest not less than 25,000
units at the time of their first investment in the Fund and not
less than 1,000 units at the time of any future investment.
However, the Fund Manager may, at its discretion, accept
subscriptions below these thresholds provided always that the
minimum initial investment shall at no time be less than 25,000
units.
Minimum Holding Period
Each Unit must be held for the Minimum Holding Period and
Redemption is not permitted during the Minimum Holding Period.
XIII Redemptions
The Redemption Process
Applications for Redemptions may only be made after the expiry
of the Minimum Holding Period by lodging a Redemption Notice with
the Fund Manager. Applications for Redemption are subject to the
acceptance of the Fund Manager (acting on behalf of the Fund
Company). Applications for Redemption or subscription must be
received by the Placing Agent by Dealing Cut-Off.
Redemptions will be processed weekly on each Dealing Day,
provided that the Fund Manager has accepted, in whole or in part, a
Redemption Notice before the most recently occurring Dealing
Cut-Off.
Redemption Proceeds will be valued at NAV on the relevant
Dealing Day.
A detailed description of the Redemption process is set out
below.
The total number of units redeemed on any given Redemption date
will not exceed 10% of all the Units in the Fund at that Redemption
date.
The Fund Manager or the Administrator may require the signature
of the Unitholder on the relevant Redemption Notice to be
independently verified to its satisfaction. The Fund will not pay
Redemption Proceeds to any third party.
To the extent that a Redemption Notice is accepted in whole or
in part by the Fund Manager before a Dealing Cut-Off, the Fund
Manager shall procure that Units are redeemed by reference to the
NAV at market close on the next Dealing Day.
Redemption Notices will be irrevocable except in the event of a
suspension of Redemptions. Further, the Fund Manager reserves the
right to refuse Redemption payment to a Unitholder if it suspects
or is advised that the payment of any Redemption Proceeds to such
Unitholder might result in a breach or violation of any applicable
Anti-Money Laundering and Know Your Client Regulations or other
laws or regulations by any person in any relevant jurisdiction, or
such refusal is considered necessary or appropriate to ensure the
compliance by the Administrator with any such laws or regulations
in any relevant jurisdiction. No party shall be liable to the
Unitholder for any loss suffered by the Unitholder as a result of
the refusal to pay or delay of payment of Redemption Proceeds as a
result of that party seeking to comply with Anti-Money Laundering
and Know Your Client Regulations.
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Redemption Proceeds
The Redemption Proceeds for each redeemed Unit will be the NAV
Per Unit at market close on the Dealing Day following the first
Dealing Cut-Off after the Redemption Notice has been accepted by
the Fund Manager, save as adjusted by the mechanism described
below.
Further, the Fund Manager may arrange for a revaluation of Units
by the Administrator if it considers that the NAV per Unit
calculated at market close on any relevant Dealing Day does not
accurately reflect the true value of the Units.
Redemption Fees
A Unitholder will not pay a redemption fee for redeeming its
Units.
Minimum Holding Period
Each Unit must be held for the Minimum Holding Period and
Redemption is not permitted during the Minimum Holding Period.
Minimum Holding Amount
Any Redemption request that will reduce the NAV of a Unitholders
holding in the Fund to below the Minimum Holding Amount will be
deemed to be a request to redeem the Unitholders entire holding in
the Fund. Any such request will be considered and processed after
the Minimum Holding Period has expired.
Payment of Redemption Proceeds
Redemption Proceeds shall normally be paid to Unitholders within
3 Business Days of the relevant Dealing Day.
Redemption Proceeds will be paid in USD rounded to the nearest
cent. Redemption Proceeds will be paid by telegraphic transfer to
the Unitholder's nominated Bahrain Islamic Bank B.S.C. bank account
under the Unitholders name. The Fund Manager may instruct the
Administrator at the request of Unitholder to pay Redemption
Proceeds in another currency at the expense and risk of the
Unitholder.
Redemption Notices sent by Facsimile
Redemption Notices may be submitted to the Fund Manager by
facsimile provided originals follow promptly. Unitholders are
reminded that if they choose to send a Redemption Notice by
facsimile, they bear the risk of it not being received. Neither the
Directors, the Fund Manager, nor the Administrator accept any
responsibility for any loss resulting from the non-receipt or
illegibility of any Redemption Notice sent by facsimile or for any
loss caused in respect of any action taken as a consequence of such
facsimile instructions believed in good faith to have originated
from properly authorised persons.
Suspension of Redemptions and Payment of Redemption Proceeds
Due to any possible adverse economic, political or regulatory
conditions or currency fluctuations, the Directors reserve the
right to suspend the Redemption of Units in exceptional
circumstances where, in the reasonable judgement of the Directors,
Redemption of Units at such times as such conditions prevail would
materially and adversely affect and prejudice the interests of
continuing Unitholders. The Directors may withhold Redemption
Proceeds from persons whose Units have been redeemed prior to such
suspension until after the suspension is lifted, such right to be
exercised in circumstances where the Directors believe that to make
such payments during the period of suspension would materially and
adversely affect and prejudice the interests of continuing
Unitholders.
The right of any Unitholder to require the Redemption of Units
will be suspended during any period when the calculation of the NAV
is suspended by the Directors.
The CBB and the Unitholders will be notified by the Fund Manager
when the suspension ends.
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Compulsory Redemption
By giving any Unitholder not less than 5 Business Days' written
notice prior to any Dealing Day, the Fund may redeem the whole or a
specified percentage of such Unitholder's Units if the Directors
consider that such Unitholder continuing to hold Units would be
detrimental to the pecuniary, taxation, legal or regulatory
interests of the Fund Company, the Fund Manager, the Administrator,
the Registrar or the Custodian or the Unitholders as a whole, or if
such holding is in contravention of any of the prohibitions
contained in this Prospectus, the Articles or the Instrument, or if
any of the representations, warranties or statements given by such
Unitholder in its Subscription Agreement were not true or accurate
or have ceased to be true or accurate. Without limiting the
foregoing, the Fund may redeem the whole or a specified percentage
of a Unitholders Units if the Directors become aware that a
Unitholder is not, or ceases to be, a Unitholder.
XIV Calculation of Net Asset Value and NAV Per Unit
Net Asset Value and NAV Per Unit shall be calculated by the
Administrator by reference to the last available traded prices for
each Fund Asset on the relevant Dealing Day. For an asset for which
a market price is not available, the value will be based on the
estimated realisable value to be determined by the Administrator in
conjunction with the Fund Manager. For other types of assets, the
method of valuation will be determined by the Directors and
Administrator of the Fund.
In calculating the Net Asset Value and the NAV Per Unit, the
Administrator shall apply the following valuation methodology.
The Net Asset Value per Unit will be calculated by the
Administrator in conjunction with the Custodian and in accordance
with generally accepted AAOIFI standards using the NAV Calculation
Formula.
The assets of the Fund are separate from the Fund Company. This
NAV Calculation Formula will apply at each subscription and
Redemption.
Debts and liabilities to be deducted when calculating NAV by
applying the relevant formula set out in this Prospectus and will
include but not be limited to the following:
(a) management and other fees and expenses of the Fund Manager
accrued but not yet paid;
(b) any expense allowance for the Funds estimated annual audit,
legal and other fees;
(c) expenses and fees of the Administrator, Custodian and
Registrar;
(d) fees and expenses of the Directors;
(e) reserves authorised or approved by the Directors or the Fund
Manager for duties and charges or taxes or contingencies (accrued
where appropriate on a day-to-day basis);
(f) other liabilities of the Fund of whatsoever nature (which
shall, where appropriate, be deemed to accrue from day-to-day)
including any outstanding payments on any Units previously redeemed
and, as from the record date in respect thereof, any dividends
declared and not paid, and contingent liabilities (if any) being
valued in such manner as the Directors may determine from time to
time in any particular case; and
(g) all costs relating to any litigation in which the Fund or
the Fund Company (acting in relation to the Fund) is involved.
The value of all assets and liabilities denominated in a
currency other than the USD will be converted to the USD at the
closing exchange rate on the Dealing Day.
The Net Asset Value of the Fund and the Units will be expressed
in USDs and will be calculated to one hundredth of one USD0.01.
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Suspension of Valuation
Calculation of the NAV Per Unit and Net Asset Value may be
suspended by the Directors on the occurrence of any one of the
following:
(a) a breakdown in the systems and or means of communication
usually employed to determine the value of the Fund Asset or
Subscription Process or Redemption Proceeds or when for any other
reason the value of the Fund Asset or Subscription Price or
Redemption Proceeds cannot be ascertained in a prompt or accurate
manner;
(b) the business operations of the Fund Manager and/or Gulf
Custody Company B.S.C.(c) in respect of the Fund are substantially
interrupted or closed as a result of or arising from pestilence,
acts of war, terrorism, insurrection, revolution, civil unrest,
riot, strikes, or acts of God or similar; or
(c) the Directors resolving to wind-up the Fund.
For the avoidance of doubt, when calculating NAV for the purpose
of calculating fees set out under the section headed Charges, Fees
and Expenses related to the Fund, the NAV Calculation will take
into account such fees which have accrued prior to the time of
calculation.
XV Reporting to Unitholders
Unitholders will be sent semi-annual statements of account.
Weekly Reporting
On a weekly basis after the Initial Offering Period, the Fund
Manager will make available a Fund Performance Review Report on the
website of the Fund Manager.
During the life of the Fund, the Fund shall submit a semi-annual
report which has been reviewed by the Auditor covering the first
six months of the Financial Year to the CBB and to the Unitholders
within 2 months of such period or such other time as agreed between
the Fund and the CBB.
During the life of the Fund, the Fund shall submit an audited
annual report to the CBB and to the Unitholders within 4 months of
the end of each Financial Year.
Semi-Annual Regulatory Reporting
During the life of the Fund, the Fund shall submit a semi-annual
report which has been reviewed by the Auditor covering the first
six months of the Financial Year to the CBB and to the Unitholders
within 2 months of such period or such other time as agreed between
the Fund and the CBB.
Annual Regulatory Reporting
During the life of the Fund, the Fund shall submit an audited
annual report to the CBB and to the Unitholders within 4 months of
the end of each Financial Year.
Accounting Standards
The semi-annual report and the audited annual report shall be
prepared in accordance with all applicable standards issued by
AAOIFI.
XVI Tax and Exchange Control Considerations
The following is a general description of certain tax and
currency control laws relating to the Units in Bahrain, and does
not purport to be a comprehensive discussion of the tax treatment
of the Units and the Fund Assets.
This general description of taxation is based upon the tax law
in Bahrain and the regulations thereunder, each as in effect on the
date of this Prospectus. This general description is subject to any
subsequent change in law and regulations that may come into effect
as of such date.
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Applicants should consult their own tax advisers as to
applicable tax laws and specific tax consequences of acquiring,
owning and disposing of Units.
Foreign exchange controls
There are no currency or exchange control restrictions currently
in force under Bahraini law and the free transfer of currency into
and out of Bahrain is permitted, subject to any international
regulations in force from time to time.
Bahrain Taxation
As at the date of this document, there is no corporate tax,
income tax, withholding tax or capital gains tax payable by the
Fund under the laws of Bahrain. There are also no currency or
exchange control restrictions in force under the laws of Bahrain
and the free transfer of currency into and out of Bahrain is
permitted. In the event that there is any material amendment or
change to the laws of Bahrain in connection with the matter
referred to above, the Fund Company shall notify the Unitholders of
such amendment or change in the next report that is circulated to
Unitholders after such amendment or change has come to the
attention of the Fund Company.
Applicants must be aware that as a result of changing law or
practice or unfulfilled expectations as to how the Fund or
Unitholders will be regarded by tax authorities in different
jurisdictions, the tax consequences for Applicants may be other
than stated. Applicants should consult their own professional
advisers on the possible tax consequences of subscribing for,
purchasing, holding or selling Units under the laws of their
countries of citizenship, residence, ordinary residence or
domicile.
Other Jurisdictions
The Fund may be liable to tax on its income or stamp duty on its
transactions in jurisdictions other than Bahrain in which it has
income arising to it and in which it conducts transactions. There
may be income taxes, withholding taxes, or capital gains taxes
payable by the Fund in such other jurisdictions. There may also be
currency or exchange control restrictions in such other
jurisdictions.
Unitholder Taxation
Applicants should ascertain from their professional advisers the
consequences of acquiring, holding, redeeming, transferring or
selling Units under the relevant laws of the jurisdictions to which
they are subject, including any tax consequences and exchange
control requirements.
XVII Actual and Potential Conflicts of Interests
Fund Manager
The Fund Manager shall at all times act in the best interests of
the Fund and the Fund Company, so far as is reasonably practicable
having regard to its obligations to other third parties.
In accordance with CBB regulation, the Fund Manager shall
not:
guarantee, endorse or otherwise become directly or contingently
liable for the obligations or indebtedness of any person, except in
accordance with the Prospectus;
acquire any asset which involves the assumption of any liability
which is unlimited;
invest in any security in a company or other undertaking, if any
director or officer of the Fund Company (or of any relevant person
and its affiliates) individually owns more than half a per cent of
the total nominal amount of all the issued securities of that
class; or collectively the directors or officers of the Fund
Company (or of any relevant person and its affiliates) owns more
than 5 per cent of those securities; nor
invest in other collective investment undertakings of Bahrain
Islamic Bank B.S.C..
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The Fund investing in the cash and cash equivalents of the
Operator, within the limits prescribed under the investment policy
in this Prospectus, may involve a potential conflict with the Fund
Managers duty to the Fund Company. Other than this investment, the
Fund Manager, nor any associated company of the Fund Manager, will
effect any transaction in which the Fund Manager or an associated
company has, directly or indirectly, a material interest or a
relationship of any description with another party, which may
involve a potential conflict with the Fund Managers duty to the
Fund Company.
All transactions undertaken by the Fund Manager shall be on an
arms length basis with all parties including the Operator.
The Fund Manager shall not be liable to account to the Fund
Company for any profit, commission or remuneration made or received
from any arms length transaction or any connected transaction. The
Management Fee, shall not be abated thereby.
Board of Directors
The Board of Directors will be officers or employees of the
Operator. All such relationships will be disclosed to, and recorded
by, the Fund Company. Each Director undertakes that should a
conflict of interest arise as a result of the aforementioned, the
Fund Company and Director will seek to resolve such conflict fairly
and in the best interests of the Fund Company and the Fund.
Service Providers
The Administrator, the Registrar and the Custodian will not be
devoting their full business efforts to the activities of the Fund.
This may involve a conflict of interest with respect to the
commitment of resources.
XVIII Risk Factors
No guarantee or representation is made that the Fund will
achieve its Investment Objective or that a Unitholder will not lose
all or a substantial portion of its investment. Investment results
may vary substantially on a monthly, quarterly or annual basis and
an investment in the Fund does not constitute a complete investment
program.
The value of the Units and the income from such Units may
decline as well as rise and Applicants should carefully review and
evaluate the merits and the risks and the other information
contained in this document before making a decision to invest in
the Fund. If you are in any doubt about the contents of this
Prospectus you should consult your stockbroker, bank manager,
solicitor, accountant or other independent financial adviser.
The Units have not been registered under the securities laws of
any jurisdiction. The resale or transfer of the Units is restricted
as set forth in this Prospectus. There is no secondary market for
the Units, nor is one expected to develop.
The risks set out below are the risks which are considered to be
material but are not the only risks relating to the Fund or an
investment in the Fund. There may be additional material risks that
the Directors do not currently consider to be material or of which
the Directors are not aware.
INVESTMENT RISKS
General Risk
There is no assurance that the Investment Objective of the Fund
will be achieved. Investors should be aware that by investing in
the Fund, there is no guarantee of any income distribution, returns
or capital appreciation.
Bahrain domiciled Shariah compliant Retail Collective Investment
Undertakings are regulated by the CBB and are subject to regulatory
disclosure and reporting requirements.
Legislative and Regulatory Risk
The structure of the issue of the Units is based on Bahrain law
and administrative practice in effect as at the date of this
Prospectus. No assurance can be given as to the impact of any
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possible change to Bahrain law or administrative practice after
the date of this Prospectus, nor can any assurance be given as to
whether any such change could adversely affect the ability of the
Fund to make payments to Unitholders.
The legislative framework in some markets where the Fund may
invest is only beginning to develop the concept of legal/formal
ownership and of beneficial ownership or interest in debt
instruments. Consequently, the courts in such markets may consider
that any nominee or custodian as registered holder of securities
would have full ownership thereof and that a beneficial owner may
have no rights whatsoever in respect thereof.
Economic Risk
Global, regional and national economic conditions may impact on
the value of the Units. In a recessionary environment, a security
may need to be sold at a discount to the fair market value of the
security. This in turn could depress the NAV and the growth of the
Fund. Generally, all investments are subject to a degree of
economic risk depending on the nature of the investment instrument,
market, sector and other factors.
Inflation Risk
Inflation can erode the real rate of return on an investment
i.e. the return received after taking away inflation. Inflation is
one of the major risks to investors over a long term period and
results in uncertainty over the future value of investments.
Conflict of Interest Risk
Investments in the cash and cash equivalent of the Operator may
give rise to conflict of interest risk. The Fund Manager will
endeavour to mitigate this risk by undertaking all transactions at
an arms length basis.
SECURITIES RISKS
Default Risk
Investment in Debt Securities may involve a certain degree of
default risk with regards to issuers. Default risk is the risk of
loss due to an issuers non or untimely payment of the investment
amount as well as the returns on investment. Such defaults can
cause a decline in the value of the defaulted Debt Securities and
impact on the NAV of the Fund.
Counterparty Risk
When the Fund conducts transactions it may be exposed to risks
relating to the credit standing of its counterparties and their
ability to fulfil the conditions of the contract that it enters
into with them. The Fund Manager will endeavour to minimise this
risk by performing credit research and analysis to determine the
creditworthiness of its counterparty prior to entry into
transactions.
Company Specific Risk
There are many specific risks which apply to individual
companies that may affect the growth of the Fund. Examples include
the possible effect on a company of losing a key executive or the
unforeseen entry of a new competitor. As a consequence the price of
any issuance by that company may fall, and subsequently affect the
growth of the overall Fund. The Fund Manager aims to minimise this
risk by adhering to the Investment Restrictions.
Currency Risk
The Fund will invest in securities and other assets denominated
in a variety of currencies but its NAV will be quoted in USD.
Accordingly, Unitholders may bear the risk of adverse movements in
the USD exchange rate against the currencies in which investments
are denominated and against the Unitholders own base currency.
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Political Risk
The financial operations of the Fund can be adversely affected
by any downturn in general economic conditions or by world events.
Political events and uncertainties can adversely affect world
markets and consequently the Funds ability to earn positive returns
for Unitholders.
Non-compliance to Shariah
The Fund and the investments of the Fund are to be approved as
Shariah compliant by the independent Shariah Advisers. None of the
Fund Manager or Placing Agent makes any representation or warranty,
express or implied, with respect to the fairness, correctness,
accuracy, reasonableness or completeness of such determination. It
should be noted that differences exist among Islamic scholars and
advisers as to the nature of Shariah compliance and no assurance is
given that other Islamic scholars or advisers would determine that
the Fund and its investments are Shariah compliant. In the event
that the status of such Shariah compliance should change then the
Fund Manager and Placing Agent accept no liability in relation to
such change but the Fund Manager will inform each Unitholder of
such change.
The investments of the Fund are to be Shariah compliant. This
means that the investments will be selected on the basis, inter
alia, of religious aspects, and none of the Fund Manager or Placing
Agent make any representation or warranty, express or implied, as
to how this selection process might have a positive or negative
impact on the value of the investment or with respect to the
performance of such Shariah compliance strategy.
Applicants should not rely on the pronouncement of the Shariah
Advisers on the compliance of the Fund and the investments with
Shariah in deciding whether to become a Unitholder. Applicants
should consult their own Shariah advisors as to whether the Fund
and the investments are compliant with Shariah. By becoming a
Unitholder, an Applicant is deemed to have represented that it is
satisfied that the Fund will not contravene Shariah principles.
Furthermore, each Unitholder shall be deemed to have represented
that it has not relied on any representation by the Fund as to the
Shariah compliance of the Fund or its investments, and has
independently made (or will make) its own assessment that the Fund
is Shariah compliant. Each Unitholder shall also be deemed to have
waived any right to raise any objections or defenses on the basis
that the Fund or any investments are not in compliance with the
precepts and principles of Shariah.
Authentication of Securities and Nomineeship
There may be particular difficulties in establishing the
authenticity of securities settled in the regions in which the Fund
may invest.
Accordingly, although the Custodian (or its appropriate
sub-custodians) on behalf of the Fund will endeavour to check that,
on its face, any such instrument appears genuine, no responsibility
can be taken for verifying the validity or authenticity of any
security instrument.
The legislative framework in some GCC markets is only beginning
to develop the concept of legal/formal ownership and of beneficial
ownership or interest in securities. Consequently, the courts in
such markets may consider that any nominee or custodian as
registered holder of securities would have full ownership thereof
and that a beneficial owner may have no rights whatsoever in
respect thereof.
Dependence on the Fund Manager
The Fund is dependent on the diligence, skill and network of its
Fund Manager and its senior management and business contacts. They,
together with other investment professionals, will evaluate,
negotiate, structure, realise, monitor and service the Funds
investments. The performance of the Fund Manager cannot be
guaranteed. Unitholders will not be entitled to contribute to the
management of the Fund and will have no influence on the operations
and decisions of the Fund. Therefore, the success of the Fund is
substantially dependent upon the continued personal efforts of the
individuals employed by the Fund Manager who will exclusively
manage the Fund. It cannot be expected that all of the individual
employees of the Fund Manager will continue to be available to the
Fund throughout its term. The loss of any one, some or all of these
key personnel or difficulties in attracting and retaining such
personnel could materially adversely affect the Funds
performance.
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Changes in Taxation
Any change in the Funds tax status, or in taxation legislation
in any of the GCC countries, could affect the value of the
investments and the Funds ability to achieve its Investment
Objective or alter the post tax returns to Unitholders. Each
Unitholder should carefully review and evaluate its own taxation
position by consulting an independent professional adviser.
Exchange Controls
The Fund may from time to time purchase investments that will
subject the Fund to exchange controls or withholding taxes in
various jurisdictions. In the event that exchange controls or
withholding taxes are imposed with respect to any of the Funds
investments, the effect will generally reduce the income received
by the Fund on its investments. Moreover, there is no guarantee
that appropriate counterparties will be found for foreign exchange
transactions or that suitable rates of exchange will be
obtained.
Competitive Environment
The Fund Manager expects that a number of other entities will
compete with it to make the types of investments that it plans to
make. Competition for investment in Debt Securities may have the
effect of increasing the price which the Fund will need to pay in
order to make a desired investment. Furthermore, some competitors
may be substantially larger and have greater financial, technical,
transaction, execution and marketing capabilities than will be
available to the Fund. Some competitors may have a lower cost of
capital and access to funding sources that are not available to the
Fund, which may give rise to competitive disadvantages for the Fund
with respect to investment opportunities. Competitors may also have
existing portfolio companies or other enterprises which, when
combined with a potential investment, may give rise to synergistic
benefits for that competitor, enabling it to pay a price higher
than the Fund would be prepared to pay. A failure by the Fund to
compete effectively with other entities operating in this
environment may result in the loss of opportunities, which could
have a material adverse effect on the Funds business, results of
operations and/or financial condition.
Liquidity Risk
Securities issued by smaller companies and/or in emerging
markets and/or frontier markets may be traded less frequently than
those issued by larger companies or in developed markets; there is
a greater risk that the Fund may have more difficulty valuing such
investments and disposing of them in a timely manner at a
reasonable price, and such investments may therefore have an
adverse impact on the performance of the Fund.
FUND RISKS
Limited Track Record
The Fund and the Fund Manager are recently established entities
with no track record. Therefore, the Fund is subject to all of the
business risks and uncertainties associated with any new business
enterprise, including the risk that the Fund will not achieve its
Investment Objective and that the value of a Unitholders investment
in the Fund could decline substantially. There can be no assurance
that the Fund will be able to achieve any of the returns referred
to in this document. Unitholders will be relying on the ability of
the Fund Manager to identify, negotiate and structure the
investments to be made by the Fund.
Regulatory Approvals and Permits
The failure to obtain or to continue to comply with all
necessary approvals, licences or permits, includin